Matilda He Take The Money and Ruin Venezuela

Hugo Chavez is dying. Dr. Jose Marquina, who correctly told the public based on his own private sources that Chavez was in respiratory failure (before the Venezuelan government announced it), denies the rumors that a special team of Russian doctors has flown into Cuba to save the Venezuelan president. But even without the Russians, things are dramatic enough, Marquina adds. Chavez is unrecognizably bloated with edema; he is in a medically induced coma to keep him quiet enough to tolerate the tubes snaking into his body and to limit his need for oxygen. Marquina was pretty certain: barring a miracle, Chavez ain't gonna make it back to Venezuela to take his oath.

Even though the Venezuelan Constitution requires a new election within 30 days if the president is incapacitated, Chavez's supporters have learned, maybe even from reading this blog, that constitutional provisions are made to be elastic. His supporters say Chavez should be given "time to recover". They've even suggested that Venezuelan justices be flown to Havana to administer the oath to the unconscious man.

The New York Times, in its own low key journalistic manner, has already declared Chavez dead. They're run his political obituary in a special called The Future of Venezuela.

"What future?", Moses Naim of the Carnegie Endowment for Peace asks. He writes that Chavez has managed to bankrupt oil-rich Venezuela. It was hard, but he did it. The Commandante Presidente gave away oil to nearly anyone who backed his anti-American agenda. Cuba, even China got theirs compliments of Hugo. The only source of hard cash he had coming in was the oil he sold to America at market prices. Naim writes:

President Chávez has bequeathed the nation an economic crisis of historic proportions.

The crisis includes a fiscal deficit approaching 20 percent of the economy (in the cliff-panicking United States it is 7 percent), a black market where a U.S. dollar costs four times more than the government-determined exchange rate, one of the world's highest inflation rates, a swollen number of public sector jobs, debt 10 times larger than it was in 2003, a fragile banking system and the free fall of the state-controlled oil industry, the country's main source of revenue.

Oil-exporting countries rarely face hard currency shortages, but the Chávez regime may be the exception. Mismanagement and lack of investment have decreased oil production. Meanwhile oil revenue is compromised partly because of Chávez’s decision to supply Venezuelans with the country's most valuable resource at heavily subsidized prices. Thus a large and growing share of locally produced oil is sold domestically at the lowest prices in the world (in Venezuela it costs 25 cents to fill the tank of a mid-sized car).

Chavez was the progressive dream on steroids. He spent on entitlements, lived off capitalism. But even this couldn't halt the process of economic collapse. But by dying, Chavez can now escape blame for an economy set to implode on his low-information electoral base. Poverty may be around the corner for most Venezuelans, but when it comes they'll blame Bush, probably literally. Francisco Toro of the Caracas Chronicles explains how it works:

Chávez has spent all of the windfall from Venezuela's enormous oil exports, and then some: the country's debt has quintupled in 14 years. Time and again spending has been hiked just ahead of elections to give Chavistas an edge. This last one was no exception.

It's been a wildly popular and successful strategy, but this kind of spending-led "socialism" can't last. For years, Venezuela has been borrowing at credit-card level interest rates. As the country runs out of money and out of people willing to lend it more, the real question is who's going to be left holding the checkbook when the spending must screech to a halt?